Real estate projects guaranteed by the government are a popular choice for investors and buyers in Turkey due to the added security and assurance that comes with a government guarantee. 

In this article, we will explore what government guarantees mean for real estate projects in Turkey, the different types of guarantees and mechanisms in place, and the advantages of buying a project guaranteed by the Turkish government.

What does government guarantee mean for projects in Turkey?

government guarantee projects

In the context of projects in Turkey, a government guarantee refers to a promise made by the government to assume financial responsibility for a specific project if the primary borrower cannot meet their financial obligations. This type of guarantee is typically provided to encourage private investment in projects deemed to be of strategic importance to the government.

There are several reasons why a government might guarantee a project in Turkey. For example, a government may want to encourage private investment in a specific sector or region, or it may wish to support the development of infrastructure that will benefit the country. In addition, a government may guarantee to mitigate the risk for potential investors on high-risk projects.

The specific terms of a government guarantee will vary depending on the project and the borrower. However, they typically include details on the contract amount, the warranty duration, and the conditions under which they will trigger the guarantee.

It is essential for investors to carefully review the terms of any government guarantee before deciding to invest in a project, as this can have significant implications for their financial risk.

In summary, a government guarantee for a project in Turkey means that the government has promised to assume financial responsibility for the project if the primary borrower cannot meet their financial obligations; this can help to attract private investment to specific projects and sectors and can help to mitigate risk for investors.

About Toki

Toki, also known as the Mass Housing Administration, is a government construction company in Turkey that is responsible for the construction and sale of affordable housing units. 

Toki projects are fully government-guaranteed, which means that the government is responsible for the units’ construction, delivery, and after-sale service.

About Emlak Konut

Emlak Konut is a government-owned real estate development company in Turkey responsible for constructing and selling residential and commercial properties. 

Emlak Konut projects are partially government-guaranteed, which means that the government is responsible for certain aspects of the project, such as the delivery and after-sale service, but not the entire project.

What are the guarantees and their mechanisms?

The guarantees and mechanisms in place for government-guaranteed real estate projects in Turkey vary depending on the type of guarantee provided.

Before Sale

Before a project is put up for sale, the government will conduct due diligence on the project and the developer to ensure that the project is feasible and that the developer has the necessary experience and expertise to complete the project.

During the Sale

During the sale of a government-guaranteed project, the government will provide certain assurances to buyers, such as guaranteeing that the project will be completed and delivered as promised. 

Suppose the project developer needs to complete or deliver the project as promised. In that case, the government will ensure that the project is completed and that the buyers receive their properties.

Delivery and After Sale

For fully government-guaranteed projects, the government is responsible for the delivery and after-sale service of the units. 

This means that the government will ensure that the units are delivered to the buyers on time and in the condition promised and will provide ongoing support and assistance to the buyers after the sale. 

The government may only be responsible for certain aspects of the delivery and after-sale service for partially government-guaranteed projects.

Types of Turkish Projects Guaranteed by The Turkish Government

Turkey has two types of government-guaranteed real estate projects: partial government-guaranteed projects and full government-guaranteed projects.

Partial government-guaranteed projects

Partial government-guaranteed projects are those in which the government is only responsible for certain aspects of the project, such as the delivery and after-sale service. Emlak Konut projects are an example of partial government-guaranteed projects.

Full government-guaranteed projects

Full government-guaranteed projects are those in which the government is responsible for the entire project, from the construction to the delivery and after-sale service. Toki projects are an example of full government-guaranteed projects.

Advantages of buying in a project guaranteed by the Turkish government

Turkish government guarantees projects

There are several advantages to buying a real estate project that the Turkish government guarantees:

  • Security: The added level of security provided by a government guarantee gives buyers peace of mind that the project will be completed and delivered as promised.
  • Assurance: Government-guaranteed projects have undergone thorough due diligence and have been deemed feasible by the government, providing buyers with assurance that the project is a sound investment.
  • Support: For fully government-guaranteed projects, the government will provide ongoing support and assistance to buyers after the sale.
  • Reputation: Government-guaranteed projects are often developed by reputable and credible developers, giving buyers confidence in the quality of the project.

Conclusion

While real estate projects guaranteed by the government are a popular choice for buyers in Turkey due to the added security and assurance they provide, it is essential to note that not all government-guaranteed projects are the best choice. 

Many reputable and credible construction companies in Turkey have a proven track record of delivering high-quality projects on time and as promised, regardless of whether or not they are government-guaranteed. 

As such, it is important to thoroughly research any real estate project before making a purchase, regardless of whether it is government-guaranteed or not.

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